YUM! Brands Inc. (NYSE:YUM)

The financial data reveals several notable trends in the intangible assets of the company over the five-year period ending in 2015.

Reacquired Franchise Rights

This asset category shows a slight decline overall, starting at $167 million in 2011 and decreasing to $168 million by 2015, with fluctuations in intermediate years. The values peaked slightly in 2013 at $188 million before tapering back toward the initial levels.

Franchise Contract Rights

The amounts remained relatively stable but exhibited a gradual decline from $130 million in 2011 to $123 million in 2015, indicating a slow amortization or reduction in recognized contract rights.

Lease Tenancy Rights

This category experienced some variation, beginning at $58 million in 2011, peaking at $71 million in 2013, and then declining to $57 million in 2015, effectively returning close to the initial value but showing volatility in the mid-term.

Favorable Operating Leases

There is a clear downward trend in favorable operating leases, with the value falling steadily from $29 million in 2011 to $11 million in 2015. This suggests a consistent reduction in such lease benefits over the period.

Other Definite-Lived Intangible Assets

This category reveals a gradual increase from $33 million in 2011 to $54 million in 2015, indicating growth in other miscellaneous intangible assets that are definite-lived.

Definite-Lived Intangible Assets, Gross Carrying Amount

The gross carrying amount increased from $417 million in 2011 to a peak of $461 million in 2013, followed by a decline to $413 million in 2015. This reflects initial investment or acquisition increases followed by disposals or amortization.

Accumulated Amortization

This figure consistently rose from -$149 million in 2011 to -$229 million in 2015, representing increased amortization expense and consumption of intangible asset value over time.

Definite-Lived Intangible Assets, Net

The net amount of definite-lived intangibles shows a downward trend, starting at $268 million in 2011, with a minor increase in 2013, then a significant reduction to $184 million by 2015. This suggests accelerated amortization or asset disposals after 2013.

KFC Trademark

The value remained constant at $31 million throughout the period, indicating no impairment, acquisition, or revaluation.

Little Sheep Trademark

This intangible shows a steep decline from a peak of $409 million in 2012 down to $56 million in 2015, signaling a substantial write-down or disposal of this asset during the period.

Indefinite-Lived Intangible Assets

After rising sharply to $440 million in 2012, the value of indefinite-lived intangible assets decreased dramatically to $87 million by 2015, correlating with the trend observed in the Little Sheep trademark.

Intangible Assets, Net

The combined net intangible assets increased markedly from $299 million in 2011 to $690 million in 2012, followed by a progressive decline to $271 million by 2015, showing volatility and a significant write-down phase post-2012.

Goodwill, Net

Goodwill increased substantially from $681 million in 2011 to $1,034 million in 2012, then declined progressively to $656 million in 2015. This pattern suggests acquisition activities in 2012 followed by impairment or divestiture effects in subsequent years.

Goodwill and Intangible Assets

The aggregate of goodwill and intangible assets reached the highest point of $1,724 million in 2012 and then decreased consistently to $927 million in 2015. The peak corresponds with significant acquisition-related asset recognition, while the decline indicates subsequent impairment or disposal of these assets.

The financial data reveals several noteworthy trends over the period from 2011 to 2015.

Total Assets

Both reported and adjusted total assets demonstrate a consistent downward trend throughout the five-year span. Reported total assets decreased from $8,834 million in 2011 to $8,075 million in 2015, reflecting a reduction of approximately 8.6%. Similarly, adjusted total assets decreased from $8,153 million to $7,419 million, indicating a reduction of about 9%. This decline suggests a possible divestiture of assets or a strategic reduction in asset base.

Shareholders’ Equity

The reported shareholders’ equity exhibits significant volatility and an overall declining trend. It peaked in 2013 at $2,166 million but fell sharply to $911 million by 2015, representing a substantial decrease of nearly 58%. The adjusted shareholders' equity follows a similar pattern but starts from a lower base, declining from $1,142 million in 2011 to just $255 million in 2015. The sharper decline in adjusted equity compared to reported equity may imply goodwill impairments or adjustments impacting the net asset value more substantially over the period.

Net Income

Reported net income fluctuates over the period, increasing from $1,319 million in 2011 to a peak of $1,597 million in 2012, then dropping to $1,051 million in 2014, before rising again to $1,293 million in 2015. Adjusted net income, which accounts for goodwill adjustments, also shows variability but is generally higher than reported figures in 2013 and 2014, reaching $1,313 million and $1,211 million respectively. This suggests that adjustments for goodwill may have a positive effect on net income calculations during those years.

In summary, the company experienced a gradual decline in both reported and adjusted total assets, alongside notable decreases in shareholders’ equity, particularly after 2013. The fluctuations in net income indicate variability in profitability, with adjusted net income occasionally exceeding reported figures likely due to goodwill adjustments. The downward trend in equity relative to assets could point to increasing liabilities or impairment charges affecting the overall financial stance. These patterns highlight the need for careful examination of asset quality and equity sustainability in future assessments.

Net Profit Margin

Reported net profit margin exhibits a modest fluctuation over the period, starting at 10.45% in 2011, rising to a peak of 11.71% in 2012, then declining to its lowest point of 7.91% in 2014, before recovering to 9.87% in 2015. The adjusted net profit margin, which accounts for goodwill, follows a similar pattern but shows less decline in 2013 and 2014, indicating adjustments mitigated some negative impacts on margins during those years.

Total Asset Turnover

Both reported and adjusted total asset turnover ratios demonstrate a gradual upward trend throughout the five-year span. Reported turnover increases from 1.43 to 1.62, reflecting improved efficiency in asset utilization. Adjusted turnover metrics consistently exceed the reported figures, suggesting that goodwill adjustments reveal even stronger asset usage efficiency, culminating at 1.77 in 2015.

Financial Leverage

The reported financial leverage ratio declines initially from 4.85 in 2011 to 4.01 in 2013, then rises sharply to 8.86 by 2015. The adjusted leverage reveals a more pronounced volatility, starting at 7.14 in 2011, dipping slightly by 2013, but surging dramatically to 29.09 in 2015. This significant increase in adjusted leverage could indicate a substantial change in capital structure or revaluation aspects related to goodwill during the later years.

Return on Equity (ROE)

Reported ROE shows considerable variability, starting very high at 72.35% in 2011, peaking moderately in 2012 at 74.14%, dropping substantially to 50.37% in 2013, recovering to 67.94% in 2014, and then escalating sharply to 141.93% in 2015. Adjusted ROE follows a similar but more exaggerated pattern, with values nearly doubling those reported, culminating with an extraordinary 507.06% in 2015. This extreme rise likely corresponds to the sharp increase in adjusted financial leverage and may reflect goodwill adjustments impacting equity measurement.

Return on Assets (ROA)

ROA trends show moderate fluctuations but overall suggest steady profitability relative to assets. Reported ROA moves from 14.93% in 2011, peaks at 17.72% in 2012, dips to 12.55% in 2013, stabilizes around 12.59% in 2014, and rises again to 16.01% in 2015. Adjusted ROA remains consistently higher than reported figures, with less pronounced drops and a peak of 20.02% in 2012, indicating that asset base adjustments improve the representation of asset profitability.

Net Income Trends

The reported net income showed an increase from 1319 million US dollars in 2011 to a peak of 1597 million in 2012, followed by a decline to 1091 million in 2013. It then slightly decreased to 1051 million in 2014 before rising again to 1293 million in 2015.

The adjusted net income figures follow a similar pattern but with less pronounced declines, especially evident in 2013 and 2014. Adjusted net income remained steady at 1319 million in 2011 and 1597 million in 2012, then decreased more moderately to 1313 million in 2013 and 1211 million in 2014, before increasing to 1293 million in 2015. This adjustment suggests that non-recurring items or goodwill adjustments had a notable impact on the reported net income in some years, particularly during 2013 and 2014.

Net Profit Margin Trends

Reported net profit margins were highest at 11.71% in 2012, declining significantly to 8.34% in 2013 and further to 7.91% in 2014, before partially recovering to 9.87% in 2015. This pattern mirrors the net income trend, indicating a reduction in profitability after 2012 with gradual improvement by 2015.

Adjusted net profit margins show a less volatile trend, with 10.45% in 2011 rising to 11.71% in 2012, then decreasing more modestly to 10.04% in 2013 and 9.12% in 2014, and recovering to 9.87% in 2015. This suggests that adjustments for goodwill or special items improved the apparent profitability in the years following 2012.

Overall Insights

The period from 2011 to 2015 shows that profitability peaked in 2012, followed by a downturn in 2013 and 2014, and a recovery in 2015. Adjustments to net income and profit margins reduce volatility and indicate that some operational performance issues were masked or exaggerated in the reported figures.

The consistent improvement in adjusted net income and margins after 2013 implies that core business profitability stabilized and started improving, despite reported figures showing sharper declines. This highlights the value of analyzing adjusted data to assess underlying operating performance.

Total Assets

Reported total assets exhibited a declining trend over the five-year period, decreasing from 8,834 million US dollars in 2011 to 8,075 million US dollars in 2015.

The adjusted total assets, which exclude goodwill, also showed a similar downward movement, falling from 8,153 million US dollars to 7,419 million US dollars in the same timeframe.

This consistent reduction in both reported and adjusted total assets suggests possible asset disposals, amortization, or other balance sheet reductions throughout the period.

Total Asset Turnover

Reported total asset turnover improved steadily, rising from 1.43 in 2011 to 1.62 by the end of 2015.

Adjusted total asset turnover displayed a higher level throughout the period, increasing from 1.55 to 1.77, indicating more efficient use of the asset base when goodwill is excluded.

The upward trend in both reported and adjusted total asset turnover ratios suggests enhanced operational efficiency and improved revenue generation relative to the asset base over the considered years.

The data reveals a consistent downward trend in total assets over the five-year period. Reported total assets decreased from US$8,834 million in 2011 to US$8,075 million in 2015. When adjusted for goodwill, total assets similarly decline from US$8,153 million to US$7,419 million over the same timeframe, suggesting a reduction in asset base excluding goodwill.

Shareholders' equity exhibits a notable downward trajectory. Reported shareholders’ equity falls substantially from US$1,823 million in 2011 to US$911 million in 2015, reflecting a decline of approximately 50%. The adjusted shareholders' equity, which excludes goodwill, shows an even more pronounced decline from US$1,142 million to US$255 million, indicating a significant erosion in the core equity capital during this period.

The financial leverage ratios illustrate increasing leverage risk over the five years. Reported financial leverage decreases initially from 4.85 in 2011 to 4.01 in 2013, indicating a reduction in dependency on debt, but then sharply increases to 8.86 in 2015. The adjusted financial leverage demonstrates a more severe increase from 7.14 in 2011 to an alarming 29.09 in 2015. This suggests that when goodwill is excluded, the company is substantially more leveraged, pointing to an increased reliance on debt financing relative to equity, and potentially higher financial risk.

Total Assets

Continuous decline in both reported and adjusted figures, indicating asset base contraction.

Shareholders’ Equity

Significant erosion in both reported and adjusted equity, with adjusted equity showing sharper declines, implying a weakening capital foundation.

Financial Leverage

Initially decreases then surges notably by 2015 in reported terms; adjusted leverage reveals a consistent upward trend culminating in extremely high leverage, highlighting increasing financial risk.

Overall, the observed patterns point towards a deteriorating financial position characterized by shrinking assets, declining equity, and growing leverage. The adjusted figures, excluding goodwill, emphasize a more critical financial situation, with equity dwindling and leverage reaching levels that may indicate heightened vulnerability and dependence on debt financing.

Net Income Trends

The reported net income fluctuated over the five-year period, initially rising from 1319 million USD in 2011 to a peak of 1597 million USD in 2012, followed by a notable decline to 1091 million USD in 2013 and 1051 million USD in 2014. In 2015, there was a recovery, with net income increasing to 1293 million USD. The adjusted net income, which accounts for goodwill adjustments, shows a similar pattern but with less volatility, particularly showing a smaller drop in 2013 and 2014 before recovering in 2015 to the same amount as reported net income.

Shareholders’ Equity Trends

Reported shareholders' equity increased moderately from 1823 million USD in 2011 to 2166 million USD in 2013, then sharply declined to 1547 million USD in 2014 and further to 911 million USD in 2015. The adjusted shareholders' equity, after accounting for goodwill adjustments, presents a smaller base starting at 1142 million USD in 2011, showing slight decline and recovery early on but dropping significantly from 1277 million USD in 2013 to 847 million USD in 2014 and down to 255 million USD in 2015. This suggests substantial goodwill impairment or write-downs impacting equity values during the latter years.

Return on Equity (ROE) Patterns

The reported ROE indicates high variability, starting at 72.35% in 2011, peaking modestly at 74.14% in 2012, then decreasing sharply to 50.37% in 2013 before rebounding to 67.94% in 2014 and surging dramatically to 141.93% in 2015. The adjusted ROE, reflecting net income and equity after goodwill adjustments, demonstrates even greater volatility and magnitude, with figures well above 100% in all years and an exceptional increase to 507.06% in 2015. This substantial rise in adjusted ROE in 2015 is primarily attributable to the significant reduction in adjusted shareholders' equity that year, emphasizing the impact of lowered equity base on profitability metrics.

Overall Insights

The data reveals that the company maintained a generally strong profitability trend in terms of net income, despite some fluctuations and a dip in the middle years. A significant decrease in equity values, especially after goodwill adjustments, suggests asset impairments or revaluations that considerably altered the company’s capital structure. The ROE metrics point to high returns relative to shareholders' equity, but the massive increase in adjusted ROE in 2015 should be interpreted cautiously, as it appears driven more by a reduced equity denominator than by a proportional increase in net income. Such patterns indicate financial leverage effects and changes in asset valuation practices that materially affect equity and profitability ratios.

Net Income Trends

The reported net income exhibits fluctuation over the five-year period, initially increasing from 1,319 million USD in 2011 to a peak of 1,597 million USD in 2012. A decline follows in 2013 and 2014, reaching 1,051 million USD, before rising again to 1,293 million USD in 2015. The adjusted net income, which accounts for goodwill adjustments, shows a slightly different pattern. While it mirrors the reported figures in 2011, 2012, and 2015, it indicates higher values for 2013 and 2014 (1,313 million and 1,211 million USD respectively), suggesting that goodwill adjustments mitigate some of the downward trend observed in those years.

Total Assets Analysis

Reported total assets demonstrate a consistent decline throughout the period, from 8,834 million USD in 2011 down to 8,075 million USD in 2015. Adjusted total assets, which exclude goodwill, also decline annually but begin at a lower base compared to the reported assets and decrease from 8,153 million USD in 2011 to 7,419 million USD in 2015. This consistent contraction in asset base may reflect asset disposals, revaluations, or other structural changes within the company’s asset composition.

Return on Assets (ROA) Observations

Both reported and adjusted ROA percentages show fluctuations that correlate broadly with net income trends despite the declining asset base. Reported ROA peaks in 2012 at 17.72% before dipping in the subsequent two years to approximately 12.5%, then rising again to 16.01% in 2015. Adjusted ROA presents higher values than reported ROA across all years, beginning at 16.18% in 2011, peaking at 20.02% in 2012, then declining to about 15.84% in 2014, and rising to 17.43% in 2015. This disparity indicates that goodwill adjustments improve the apparent efficiency of asset utilization in generating profits. The relative stability in ROA amid declining assets suggests improved asset efficiency or profitability enhancements over time.

Overall Insights

The financial data reveals a company experiencing some volatility in earnings, with a notable dip in reported net income in the middle years that is partially offset when adjustments for goodwill are considered. The steady contraction of total assets, both reported and adjusted, highlights a shrinking asset base which may reflect strategic asset management decisions. Despite asset reductions, the company maintains or improves its asset profitability as indicated by relatively strong ROA figures, especially after adjustments. These trends suggest efforts toward optimizing asset use and sustaining income generation capabilities under evolving asset conditions.